As it works to close its recently announced acquisition of Transmode, Infinera is still showing its ability to be a cash-generating machine. The optical vendor late Tuesday reported its fifth consecutive quarter of revenue growth, posting $186.9 million in revenue for the first quarter, and forecast a possible $200 million revenue period to come in the second quarter. (See Infinera Makes $350M Offer for Sweden's Transmode.)
The Q1 revenue figure is slightly above Infinera Corp. (Nasdaq: INFN)'s revenue mark of $186.3 million in the fourth quarter of 2014, and 31% higher than the first quarter of 2014. Infinera also reported higher gross margins and net income in what company officials repeatedly referred to as a "typically soft quarter." (See Infinera Q1 Revenue Reaches $186.9 Million.)
Infinera CEO Tom Fallon also said on the company's earnings call that Infinera's Cloud Xpress platform for data center interconnection continues to meet expectations on the sales front. Just this week, the vendor announced the Japan Internet Exchange and education service provider Blackboard as the latest customers for the product.
"We have seven invoiced customers for Cloud Xpress, and we have several more in lab and field trials," he said. "We are confident that our revenue in 2015 from that product will be in the range the analyst community has been predicting [roughly $30 million to 60 million]."
Infinera CFO Brad Feller declined to disclose what percentage of Infinera's revenue the Cloud Xpress currently accounts for, but it is clear that it is already contributing to the company's revenue growth streak. Feller offered second-quarter guidance that included the expectation for revenue to come in at about "$200 million, plus or minus $5 million, which would represent 21% year-over-year growth."
The first-quarter posting was Infinera's first earnings report since it made three announcements within the last month that were each highly significant in their own ways. First, the company announced the development of sliceable PIC technology to enable greater bandwidth flexibility. Next, Infinera announced that it had a deal with Facebook to supply the social media giant with its DTN-X platform. While few other details were available, the revelation was solid proof of the success Infinera has claimed to be having with major Internet content providers. Finally, Infinera unveiled its surprising bid to acquire Transmode Systems AB , a move which will help fill out Infinera's metro portfolio. (See Infinera Asks: Hungry for a Slice of Photonics?, Infinera's Big Customer Reveal: Facebook and Infinera Coming Closer to Mastering the Metro.)
Infinera officials didn't have anything new to add regarding the Transmode acquisition, saying that it is still on track to close next quarter. However, Fallon didn't pass up an opportunity to criticize his competitors' M&A moves. Asked about the Nokia-Alcatel-Lucent deal, he said, "The history of large companies getting together and efficiently taking care of customers, and creating business in a short term? I'm not sure there is one. While they're going to worry about who gets the biggest office and who gets a car on the company, I'm going to work really hard to go take care of their former customers." (See Nokia Makes €15.6B Bid for Alcatel-Lucent.)
— Dan O'Shea, Managing Editor, Light Reading